Despite Indian economy facing the brunt of nationwide lockdown after the outbreak of the Covid-19 pandemic, the government’s digital payments system Unified Payments Interface (UPI) has surprisingly managed to breach the 1-billion mark in terms of number of transactions for a straight sixth month in March.
The National Payments Corporation of India (NCPI)-owned UPI recorded 1.25 billion transactions in March 2020 amounting to transactions worth Rs 2.06 trillion, according to an update on Twitter.
The number of transactions was, however, 6% lower when compared with the previous month. In February 2020, UPI had seen 1.33 billion transactions worth Rs 2.22 trillion.
Experts say the fall in the number of transactions can be attributed to the restriction on people’s movement across the country which has curtailed consumer spending. Malls, markets, restaurants and other entertainment avenues have also been shut in the later half of March, which has pulled down the numbers further. Yes Bank’s moratorium also impacted UPI apps which were powered by the private lender in March – the worst hit being PhonePe.
Some relief can be seen this month, in April 2020, as people are increasingly starting to contribute to the PM-CARES Fund to help fight Coronavirus through the UPI route. However, the new person-to-person charges, which come into effect on 1 April, can also have an adverse effect on the payment ecosystem which will be seen in times to come.
Under the revised payment terms, after availing the 20 free transactions, UPI users will have to pay Rs 2.5 for transactions under or equal to Rs 1,000, and Rs 5 for transactions above Rs 1,000. On top of that, 18% of goods and services tax (GST) will also be charged on these transactions. Currently, users are not charged for UPI transactions in a bid to boost the popularity of the system.